By Jaboner Jackson 8 a.m. | The auction sale through U.S. Bankruptcy court of the Los Angeles Dodgers to the highest bidder continues in earnest. Bidding syndicates have been whittled down to seven from more than double that amount when the auction process began. Since current Dodgers owner Frank McCourt owns the parking lots surrounding Dodger Stadium under a separate company that is not bankrupt, he has decided to hold onto the parking lots. Accordingly, McCourt's parking lot holdings have pushed real estate developers into the forefront of the bidding process. McCourt will be inclined to pick an ownership group that will align its long-term real estate interests with his. Last week, footballphds.com detailed the timeline for the sale and introduced the current bidders for the Dodgers. Today, we Stack Rank the Next Owner of the Los Angeles Dodgers.
1. Mark Walter and Magic Johnson | The Walter-Johnson syndicate is the popular choice among Angelenos because of Magic Johnson's success in the local sports and business communities. But popularity does not win auctions. Rather money--both current and future--does. Mark Walter is the money man behind the syndicate. His Guggenheim Partners holds more than $125 billion in assets. Walter will provide the bulk of the financing for the Dodgers transaction.
But financing is only part of the story. McCourt's real goal is to develop the parking lots surrounding Dodger Stadium. Magic Johnson has achieved remarkable real estate success in economically depressed areas through Canyon Johnson Urban Funds, a joint venture between Canyon Capital Realty Advisors and Johnson. Canyon Johnson is currently looking to place $1 billion in investments, which McCourt is eyeing for his parking lots. The Walter/Johnson syndicate offers the most long-term benefit for McCourt because of these real estate issues.
2. Steven Cohen, Steve Greenberg, and Arn Tellem | Money matters most and nepotism matters almost as much. With a net worth of $8.3 billion and significant access to liquidity in his net worth, Steven Cohen brings the most cash money to the table. Cohen is the founder of SAC Capital Advisors, LLC, a hedge fund sponsor out of New York. But Cohen is only one of the All-Stars in this syndicate. Steve Greenberg has experience working with MLB. He successfully advised on Jim Crane's purchase of the Houston Astros last year. If business is only and always just about the money, Cohen's syndicate has the cash to pull off the victory.
But nepotism matters too, and Blackstone Group, the private equity firm orchestrating the bidding process for the Dodgers, is a large investor in Cohen's hedge funds. Although lacking core competencies in real estate development, the Cohen syndicate brings the most real money to the table.
3. Tom Barrack | Tom Barrack heads Colony Capital, a Santa Monica company that holds $35 billion in real estate investments. Colony has the ability to secure real estate financing over the coming years for developing Chavez Ravine. And McCourt has taken notice. Real estate developers have eyed the Dodgers because of the parking lots in Chavez Ravine that are waiting to be developed. As Angelenos have gone east to the Los Angeles neighborhoods of Los Feliz and Silver Lake over the past two decades and more recently to Echo Park, Highland Park, and Eagle Rock, gentrification and increased property values have followed. Local real estate developers view the area of Chavez Ravine, which is accessible to freeways, including the 5, 2, and 101, as one of the last bastions of Los Angeles development. The play for real estate developers is less about the Dodgers and more about developing the lots surrounding Dodgers Stadium in conjunction with McCourt.
4. Stan Kroenke | Stan Kroenke's bid has garnered significant fan and media interest because he currently owns the St. Louis Rams, an NFL team that has oftentimes been rumored to relocate to Farmers Field in Los Angeles. Despite this attention, Kroenke's bid on the Dodgers has little bearing on any possible relocation plans for the Rams. Even though NFL bylaws prohibit a majority NFL owner from also owning controlling equity positions in other professional sports teams outside of the NFL owner's franchise city, the NFL has not enforced this aspect of the NFL bylaws with any gusto. When Kroenke entered into a purchase agreement to buy 60% of the Rams from Chip Rosenbloom and Lucia Rodriguez in 2010, he already owned the NBA's Denver Nuggets and NHL's Colorado Avalanche. Accordingly, Kroenke did what many successful businesspeople do--he ceded control of the team to his son in a roundabout manner. And the NFL allowed this transaction, even though the transaction hardly satisfied the spirit of the NFL bylaw and certainly did not resemble anything close to a true equity transfer. A true equity transfer would have triggered tens of millions of dollars in tax bills but Kroenke paid nothing.
Accordingly, it is important to consider Kroenke bid's to buy the Dodgers as another attempt to expand his family's sports empire and not just his own. Kroenke certainly has the financial capacity to successfully orchestrate a $1.5 billion bid. And he has the ability to outbid others because of cost synergies across his entire sports empire. Technicalities aside, Kroenke owns controlling interests in the Rams, Nuggets, Avalanche, English Premiere League Arsenal, Pepsi Center (Denver, CO), and Altitude Sports Network. Due to the ability to consolidate costs running the Dodgers and Dodger Stadium with his other sports assets, Kroenke certainly can afford to bid more than the other syndicates, especially with his wife, Wal-Mart heiress Ann Walton Kroenke, backing him up. But because he lacks core competencies in real estate development, McCourt will be less inclined to choose him as the winning bid.
5. Alan Casden | Alan Casden lost a bid to buy the Dodgers in 2003, during which time he put forward a plan to move the Dodgers to downtown Los Angeles. Such plans are decidedly more difficult these days. Nowadays, AEG controls downtown properties and has expressed no interest in building a baseball stadium. Casden is a longshot with a net worth of only $1.2 billion and lackluster relationships with the television networks.
6. Jared Kushner and Family and Aryeh Bourkoff | Jared Kushner is the wildcard in the Stack Rankings. Although Kushner himself lacks the financial capacity to buy the Dodgers, his family has a multi-billion dollar net worth that is focused on east coast real estate. Furthermore, Aryeh Bourkoff is Vice Chairman of investment bank UBS and has worked with Time Warner Cable extensively on the investment banking side. Such a relationship could bring a formidable financing partner to the table and catapult this syndicate to the top.
7. Stanley Gold and Disney family | Money can only buy so much these days. Stanley Gold heads up Shamrock Holdings, an investment firm founded by the late Roy E. Disney to manage the Disney family's wealth. Although Shamrock invests in real estate, the company does not actively engage in real estate development or construction. They mostly provide financing through a series of real estate investment funds, including the $85 million Genesis L.A. Real Estate Fund and $100 million Shamrock-Hostmark Hotel Fund. Without deep pockets or core real estate development experience, Gold and the Disney family are on the outside looking in.
Joining the Winner
Television networks will look to align themselves with a winning syndicate to guarantee television broadcast rights of the Dodgers when the current TV contract expires after the 2013 MLB season. Time Warner Cable, FOX Sports, MSG, and CBS have all engaged in talks with several of the syndicates to join them in their bids, but at this time it is unclear which network has aligned with whom.
Timeline and Bidders for Dodgers (03/2012)
Jaguars Not Coming to LA (11/2011)